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HOT TOPIC Stop what you're doing. Get a line of credit.

AgainstAllOdds

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At most banks, for $150 a year you can open up a business line of credit up to $100,000 without providing financials. All you need is a personal guarantee and good personal credit.

Then, you have $100k sitting for you for whenever you need it.

When you need it, you only pay interest on the amount you take out.

Interest rates are around 7% -- depends on the industry risk and your personal credit score.

Payback is 2% of the outstanding balance per month.

Talk to your local business banker. Line up the capital before you need it. Get ready to scale.

*Warning* Only take on debt when you know you can easily pay it back or need it for a "no-brainer". An example of this would be having customers lined up for your product/service and just taking on debt to service the order.
 

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CPisHere

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Lines of Credit are great because if an opportunity comes up, it's incredibly accessible.

That said, I did have to give financials for mine. And different people will get approved for different amounts based on their financials. Each bank probably has their own slight differences as well. Mine only wanted to start with a $25k LOC, then a few years later added an additional $50k.
 

Patrickg

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That's great information.

I opened two new credit cards for this reason because my business is booming but I need more inventory.

Very timely so I will talk to the banker tomorrow. Thanks
 

Scot

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Where are these magical banks?

So far I’ve only found one bank willing entertain the idea of me applying for a Line. Every other bank, upon hearing I was less than 2 years old said no.
 

CareCPA

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Where are these magical banks?

So far I’ve only found one bank willing entertain the idea of me applying for a Line. Every other bank, upon hearing I was less than 2 years old said no.
I went local. I was buying real estate with no business history. The big banks said no, but the local bank loaned at great rates.
Real estate may be different than inventory-based businesses, but worth a shot.
 

Vigilante

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Where are these magical banks?

So far I’ve only found one bank willing entertain the idea of me applying for a Line. Every other bank, upon hearing I was less than 2 years old said no.
You look much older than that and you are very articulate
 

Scot

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I went local. I was buying real estate with no business history. The big banks said no, but the local bank loaned at great rates.
Real estate may be different than inventory-based businesses, but worth a shot.
Yeah, with RE, they can secure the loan. If you default, they still have a juicy piece of real estate to liquidate.

You look much older than that and you are very articulate
Leap years and such.

Most banks have minimum 2 yrs in business from what I’ve seen.
 

CareCPA

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Yeah, with RE, they can secure the loan. If you default, they still have a juicy piece of real estate to liquidate.
True, but it was still harder to find one then I expected.
There may also be private money for businesses with no history. Higher interest, but could bridge you the two years until you can go to a "real" bank.
 

Rivoli

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At most banks, for $150 a year you can open up a business line of credit up to $100,000 without providing financials. All you need is a personal guarantee and good personal credit.

Then, you have $100k sitting for you for whenever you need it.

When you need it, you only pay interest on the amount you take out.

Interest rates are around 7% -- depends on the industry risk and your personal credit score.

Payback is 2% of the outstanding balance per month.

Talk to your local business banker. Line up the capital before you need it. Get ready to scale.

*Warning* Only take on debt when you know you can easily pay it back or need it for a "no-brainer". An example of this would be having customers lined up for your product/service and just taking on debt to service the order.
Where are you seeing this? I have 430k in open sales right now and basically everyone refused me except one place "BlueVine Capital" and I only got 60k with 6% interest....
 

ApparentHorizon

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Where are these magical banks?

So far I’ve only found one bank willing entertain the idea of me applying for a Line. Every other bank, upon hearing I was less than 2 years old said no.
New banks. Big or small corp, when they open up shop in a new area, they're clamoring to get the ball rolling. Better rates too.
 
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AgainstAllOdds

AgainstAllOdds

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Where are these magical banks?

So far I’ve only found one bank willing entertain the idea of me applying for a Line. Every other bank, upon hearing I was less than 2 years old said no.
I went with PNC.

Most of the banks want 3 years in business or more, which I'm guessing they check based on the LLC incorporation date.

Where are you seeing this? I have 430k in open sales right now and basically everyone refused me except one place "BlueVine Capital" and I only got 60k with 6% interest....
PNC.

And a 6% rate for business is pretty good.
 

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Scot

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I went with PNC.

Most of the banks want 3 years in business or more, which I'm guessing they check based on the LLC incorporation date.
Wait, so are you saying that PNC does or does not want to see 3 years in business?
 

IGP

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Wait, so are you saying that PNC does or does not want to see 3 years in business?
Every time I login to my WellsFargo account, they prompt me for a 3.99% fixed rate and (free for the first year) line of credit up to 100K.

Could be an option?
 

Tom.V

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LOC's are great to have just sitting around, both personal and business. I have a few now, but ideally want around $500k in accessible credit lines. I will have to do a little more shopping around.

@AgainstAllOdds Thanks for the PNC suggestion, submitting an application now.

Edit: Application in at PNC, went for the whole $100k. Should know something within 48 hours. Went ahead and hit every other bank in this one horse town I'm living in. Half of them didn't even know their bank offered a business line of credit. :rofl:

Every time I login to my WellsFargo account, they prompt me for a 3.99% fixed rate and (free for the first year) line of credit up to 100K.

Could be an option?
I have one of those. Past the 1st year now, but it's fine. Even though WF is a shit company.
 
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Scot

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Every time I login to my WellsFargo account, they prompt me for a 3.99% fixed rate and (free for the first year) line of credit up to 100K.

Could be an option?
Damn, I’ll look at it then.

LOC's are great to have just sitting around, both personal and business. I have a few now, but ideally want around $500k in accessible credit lines. I will have to do a little more shopping around.

@AgainstAllOdds Thanks for the PNC suggestion, submitting an application now.


I have one of those. Past the 1st year now, but it's fine. Even though WF is a sh*t company.
Damn that’s ambitious. I wouldn’t mind that to handle inventory though.
 

LittleWolfie

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At most banks, for $150 a year you can open up a business line of credit up to $100,000 without providing financials. All you need is a personal guarantee and good personal credit.

Then, you have $100k sitting for you for whenever you need it.

When you need it, you only pay interest on the amount you take out.

Interest rates are around 7% -- depends on the industry risk and your personal credit score.

Payback is 2% of the outstanding balance per month.

Talk to your local business banker. Line up the capital before you need it. Get ready to scale.

*Warning* Only take on debt when you know you can easily pay it back or need it for a "no-brainer". An example of this would be having customers lined up for your product/service and just taking on debt to service the order.

If you have customers lined up why wouldn't you just take pre orders to service the order?
 

Scot

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If you have customers lined up why wouldn't you just take pre orders to service the order?
For someone who’s admitted to not succeeding thus far in business, you’re talking a big game.

Most of the successful players on here all have active lines of credit. They’re extremely valuable tools to use to have access to larger capital at lower interest rates.

The pattern I’m seeing here is, you’re thinking small. Your intro was that you don’t want to be a millionaire. Yes, if all you’re shooting for is $4k in MRR, then you don’t need a LOC, investors, and can presell your digital product.

But if you’re shooting for a $20m per year in revenue business that’s inventory heavy, the rules of the game change.

You need to shift your perspective and realize that “business” is a broad landscape and your preconceived notions don’t apply to every single one.
 

LittleWolfie

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Sorry, if it sounded snarky.

Your right, I don't have the skills or the knowledge that's why I'm asking. I want to know why the (succesfull) people who chose that path chose it over another.

Okay, so sounds like not the process for me, but doesn't mean I can't learn from it right?

So is this more helpful to a inventory heavy business, perhaps less useful for a high end Saas aiming at 20mil? Or more helpful for inventory?

What better way to change your mindset, than asking questions?
 

Patrickg

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Sorry, if it sounded snarky.

Your right, I don't have the skills or the knowledge that's why I'm asking. I want to know why the (succesfull) people who chose that path chose it over another.

Okay, so sounds like not the process for me, but doesn't mean I can't learn from it right?

So is this more helpful to a inventory heavy business, perhaps less useful for a high end Saas aiming at 20mil? Or more helpful for inventory?

What better way to change your mindset, than asking questions?

Plus certain business like mine people don't preorder. I'm not selling the next coolest video game. I'm in a very need based business and if someone needs it they can't wait.

Just one scenario.
 

Scot

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Sorry, if it sounded snarky.

Your right, I don't have the skills or the knowledge that's why I'm asking. I want to know why the (succesfull) people who chose that path chose it over another.

Okay, so sounds like not the process for me, but doesn't mean I can't learn from it right?

So is this more helpful to a inventory heavy business, perhaps less useful for a high end Saas aiming at 20mil? Or more helpful for inventory?

What better way to change your mindset, than asking questions?
Lines of credit work really well on businesses that have a lot of acounts receivable. My business for example, I have to run production on inventory, then ship to customer and invoice them, wait 30-45 days to be paid. So, I usually got a 60 day cycle between having to buy the product and getting paid for it.

A lot of industries don’t work on preorders. In almost every consumer packaged good market, you’d be laughed out of the meeting if you asked for upfront payment, let alone preorders.

If we’re talking about a Saas product or any other digital product, you can probably get away with using preorders to start the ball rolling.

I think the problem is that we see things like Kickstarter. People preorder sometimes up to 7 figures of product. That’s a great way to get started. But what we don’t see if the next few years of that business. In order to continue running products they need more funding.

Looking at my business again. When I’m running at peak efficiency, I’ll be turning a 30% margin. That’s industry standard for me. But at my lower scale, I’m turning 5-10% margin. If I kept going slow and steady, only operating off my profit, it would take me a couple years to get to a bigger order size. And this is assuming I never had any expenses.

The best thing you can do when evaluating the potential need is plotting out what your business looks like over the next 5 years. It’s important to know what the cash flow structure will look like.
 

LittleWolfie

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Lines of credit work really well on businesses that have a lot of acounts receivable. My business for example, I have to run production on inventory, then ship to customer and invoice them, wait 30-45 days to be paid. So, I usually got a 60 day cycle between having to buy the product and getting paid for it.

A lot of industries don’t work on preorders. In almost every consumer packaged good market, you’d be laughed out of the meeting if you asked for upfront payment, let alone preorders.

If we’re talking about a Saas product or any other digital product, you can probably get away with using preorders to start the ball rolling.

I think the problem is that we see things like Kickstarter. People preorder sometimes up to 7 figures of product. That’s a great way to get started. But what we don’t see if the next few years of that business. In order to continue running products they need more funding.

Looking at my business again. When I’m running at peak efficiency, I’ll be turning a 30% margin. That’s industry standard for me. But at my lower scale, I’m turning 5-10% margin. If I kept going slow and steady, only operating off my profit, it would take me a couple years to get to a bigger order size. And this is assuming I never had any expenses.

The best thing you can do when evaluating the potential need is plotting out what your business looks like over the next 5 years. It’s important to know what the cash flow structure will look like.
I'm thinking of thinks like online retailers with their Just-in-time which is almost dropshiooing too. Customer buys product, then it gets purchased, sold and transhipped.
 

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IGP

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I'm thinking of thinks like online retailers with their Just-in-time which is almost dropshiooing too. Customer buys product, then it gets purchased, sold and transhipped.
If you are drop shipping, fine no problem. But even in an e-commerce business (self-fulfilled) like mine where I send $30K+ to china every month to buy inventory you need credit. I have an Amex platinum and an Amex Gold card to handle my float with an unlimited line of credit. (I say that because they don't tell you a limit).

What happens when Q4 rolls around and I want to be prepared for BFCM? Now I need to order $100K worth of product if I really want to smash Q4.

What if Amex decides that I am only worthy of 50K? Now, I'm screwed. And keep in mind I am small potatoes!

You don't understand because you are not speaking from experience.
 

Flybye

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Ive considered a LOC, but am really scared to borrow money for a business I just opened up to start with debt. Let alone the fact most banks want to see you in business for a few years. My problem was I had several expensive family issues come up which ate into my startup fund. As a result I have been forced to sell a lot of things around the house to try to compensate.
 

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Every time I login to my WellsFargo account, they prompt me for a 3.99% fixed rate and (free for the first year) line of credit up to 100K.

Could be an option?
This

If the business age is a roadblock, why not open a perosnal line. BBVA and Regions send me pre-approval for personal lines up to 50k probably twice a month. Since with a small business you're going to have to pg everything anyway, what's the difference.

Also, if you're not keeping at least 5-10 credit cards open and requesting line increases every 6 months, you're doing credit wrong :clench:
 

Tom.V

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Update: 2 weeks later, still no final response from PNC. I've never made a credit request and had to wait this long for a response. I did receive email correspondence from a loan closing officer, but she said it should be by end of this week. At this point, I'm not counting on it.

@ApparentHorizon do you know if there is a good resource anywhere to find banks that have opened recently?
 

ChrisR

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Update: 2 weeks later, still no final response from PNC. I've never made a credit request and had to wait this long for a response. I did receive email correspondence from a loan closing officer, but she said it should be by end of this week. At this point, I'm not counting on it.

@ApparentHorizon do you know if there is a good resource anywhere to find banks that have opened recently?
I just gave em (PNC) a call a few days ago. Found out really quick that they didn't serve my area. No big deal.

I'm going to stop by a Wells Fargo sometime this week and see how that goes.
 

ApparentHorizon

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Update: 2 weeks later, still no final response from PNC. I've never made a credit request and had to wait this long for a response. I did receive email correspondence from a loan closing officer, but she said it should be by end of this week. At this point, I'm not counting on it.

@ApparentHorizon do you know if there is a good resource anywhere to find banks that have opened recently?
Your local business journal/newspaper.

For example, we just had United Community Bank move into Spartanburg, and looks like they're acquiring in your area:

https://upstatebusinessjournal.com/united-community-bank-makes-move-raleigh/

They're aggressively expanding, so might be worth checking out.
 

Tom.V

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Your local business journal/newspaper.

For example, we just had United Community Bank move into Spartanburg, and looks like they're acquiring in your area:

https://upstatebusinessjournal.com/united-community-bank-makes-move-raleigh/

They're aggressively expanding, so might be worth checking out.
Lol interestingly enough the branch I went to was a former Four Oaks Bank that was acquired by them. That was actually the guy that didn't even know they offered a BLoC!

He did call me back the next day though, limit was $25k and the fees were pretty bad from what I remember from the voicemail.
 

ApparentHorizon

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Lol interestingly enough the branch I went to was a former Four Oaks Bank that was acquired by them. That was actually the guy that didn't even know they offered a BLoC!

He did call me back the next day though, limit was $25k and the fees were pretty bad from what I remember from the voicemail.
The rates are flexible, regardless of how long they've been around.

The guy sounds like a baboon, but even a monkey reaches out of the cage when offered a banana.
 

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